Pinnacle Foods, Parsippany, N.J., has made significant strides to strengthen its product development and research performance. Purchasing Boulder Brands in 2016 gave it a new growth platform with Boulder's Udi's and Glutino gluten-free brands, as well as Evol "clean and convenient" frozen meals and Smart Balance and Earth Balance spreads.
Pinnacle is taking a hybrid approach to its acquisition of Boulder Brands, keeping operations in Colorado and preserving the business’s unique attributes. Pinnacle is also combining its processes with many of Boulder’s to help the business unit grow faster and improve upon the business model. Pinnacle's large scale, for example, facilitates solving technical challenges at Boulder Brands and sourcing ingredients less expensively.
Developing new product lines in Pinnacle’s Birds Eye brand is also a significant part of the company’s growth plan. Growing the Birds Eye frozen vegetable brand is making the freezer case a buzz-worthy and healthy destination in supermarkets, says CEO Mark Clouse. The timing for "making vegetables ubiquitous," one of Pinnacle's main missions, couldn't be better. Convenience, clean labels and less waste are some of the reasons there's more interest in frozen foods lately, says marketing research firm Acosta (www.acosta.com). Twenty-six percent of U.S. shoppers indicate they've been shopping for frozen foods more often over the past year, with that number at 43 percent among millennial shoppers.
So over the past two years, Pinnacle expanded the Birds Eye brand with new products concentrating on taste, convenience and value. Birds Eye Flavor Full Vegetables add such bold tastes as wasabi and buffalo. Protein Blends side dishes mix legumes, vegetables and whole grains. Signature Skillets are meals that include protein choices like prime rib stew, shrimp lo mein and maple teriyaki pork, ready in 15 minutes. Veggie Made Rice, a cauliflower-based side dish, mimics the mouthfeel of rice. And Veggie Made Pasta replaces starchy pasta with zucchini and lentils in a choice of flavorful sauces.
Organic vegetables, unique grains and Voila! Disney-themed family meals also are new platforms within the brand. "We make vegetables accessible, convenient, delicious – that’s how we're expanding consumption and attracting new, younger consumers to the category," says Mark Schiller, executive vice president and chief commercial officer. "We take starches people love and make them out of vegetables, without any trade-off in taste. The Veggie Made platform is one I'm most proud of."
R&D innovation opportunities
The R&D group operates from two main centers in the U.S.− one at headquarters in Parsippany, N.J., and one in Boulder, Colo. − each with its own testing lab. Three Innovation leads are based in Parsippany: Mark Izzo, vice president of product development; Jill Denison, vice president of innovation; and Steve Gunther, senior vice president of productivity and commercialization. Behroze Mistry, vice president of innovation and R&D, oversees the Boulder operation. Altogether, there are about 100 R&D employees in the U.S. and Canada.
"Our unified philosophy is to create value by solving real consumer problems and needs," Schiller explains. Tracking changing consumer lifestyles, the R&D group targets consumers with specialized eating approaches, be they gluten-free, plant-based or clean-label and convenient.
The team focuses on three things. The first is health and wellness. "Consumers want naturally healthy food that meets their specific lifestyles," he says, and Udi's, Glutino, Earth Balance and Gardein brands meet these demands. "Consumers also want cleaner labels, with ingredients they can find in their pantries." Evol plays a big role there, as does the renovation of core products to contain no high-fructose corn syrup, for example.
Second, consumers want delicious food. "We balance food science with culinary skills. That’s why our Veggie Made platform was created," Schiller says. Much of the development in the Birds Eye brand combines this pursuit of premium taste with health and wellness.
"We take food you love and make it healthier using veggies, yet still make it taste like the product it's replacing. Cauliflower rice that tastes like rice, for instance, and cauliflower mashers that taste like mashed potatoes. We provide a full serving of vegetables and fewer carbs, but there's no compromise on taste. Udi's is about to launch a gluten-free bread that tastes exactly like full-gluten bread, in the same size with the same texture."
And third, product development has to deliver products that are affordable and margin-accretive. "If we can’t make money at it, we won’t do it," Schiller relates. "Everything we launch is higher margin than the things we currently make, so we trade consumers up and have more profit to reinvest in marketing to drive awareness and trial of the new items. All stakeholders win when we do this. Consumers get better products. Customers get higher revenue per transaction. Pinnacle gets better sales and profits."
About 29 percent of consumers say they're eating more non-animal sources of protein, he adds. "Among millennials, vegetarian and vegan diets are growing rapidly. We’re bringing millennials into legacy product categories by making legacy offerings contemporary."
The Gardein and Earth Balance brands also are in good positions to serve such consumers, Schiller says. "Many consumers are becoming flexitarians, partially giving up meat and wanting more plant-based foods in their diet. Plant-based is better for the environment, using less water and producing less greenhouse emissions that harm the planet."
Gardein is a high-growth business, growing by 30 percent per year since Pinnacle bought it, he points out. "Consumers are gravitating here. The products are highly differentiated, and the plant-based versions of meat taste just like conventional meat. Consumers cannot tell the difference."
Team's special sauce
Ideas for new products come from everywhere, Schiller emphasizes. "We bring in external stimuli − focus groups, online consumer panels, social media, farmer’s markets, restaurant menu trends and our consumer call center − to create ideas that we then assess with consumers. We create a culinary prototype and get iterative feedback internally and externally to ensure the product lives up to the concept consumers want."
The type and amount of research the R&D team conducts is based on an assessment of risk versus opportunity, and also uses a process of rapid prototyping, evaluation and refinement, moving quickly as it maximizes the use of its R&D labs.
"We're maniacally focused on speed without compromise," Schiller points out. "We want to be fast and efficient while delivering exactly what the consumer wants/needs. We are scrappy and entrepreneurial – this is part of our unique culture. We use less formal and quantitative research relying on informed judgment with some validation. That's our special sauce."
Schiller says the company's product developers look for ideas that can expand categories, attract new consumers and work for several eating occasions. Duncan Hines' Perfect Size For 1 microwavable coffee mug cake mixes, in a whopping 18 varieties, is one example. A permissible indulgence aimed at smaller households, the personal-sized cake, ready to eat in about a minute, requires no skill, little preparation and no cleanup.
"A top-selling new product in the center of store this year (in any category), Perfect Size for 1 went from idea to first shipment in about nine months," says Schiller. "Chef Joe DiPaolo came up with the idea. He’s one of the top 10 pastry chefs in the U.S. The mixes have no artificial preservatives or flavors and are personalized and customized so that everyone gets their favorite."
Also new is a line of healthy oils under the Wish-Bone umbrella. Five-flavor EVOO (extra virgin olive oil) dressings and marinades and new Wish-Bone Avocado Oil dressings come in on-trend flavors like Bacon Balsamic Vinaigrette and Roasted Garlic Citrus.
R&D funding increases in proportion to sales growth, and considering today's low growth business environment, has risen modestly since 2015. "It’s a fixed percentage of sales," Schiller mentions. "We have a very lean operating model and are very disciplined in spending.
"Roughly 10 percent of total company sales come from innovations launched in past three years. We keep brands relevant, attract new consumers and give existing consumers new ways to enjoy brands through adjustments in ingredients, packaging or ways to make them easy-to-eat, on-the-go or fool-proof to prepare."
Schiller also takes pride in the fact that the R&D team immerses itself in the consumer landscape to really understand what consumers buy and what their needs are and then creates offerings to meet those needs.
"The best information comes in the market, at the shelf, where consumers vote with their wallets, instead of in a simulated environment," he says. "We don’t consider our job finished until consumers make repeat purchases, signifying that the product is meeting their needs."